Gold demand hit record value level in Q4 2012

In value terms, gold demand in 2012 was US$236.4bn – an all-time high – while demand for the final quarter of the year was 6% higher year-on-year at US$66.2bn, marking the highest ever Q4 total.

According to the latest quarterly report from the World Gold Council (WGC), the average gold price during 2012 was $1,669.0/oz, up 6% from $1,571.5/oz in 2011.

Central bank buying for the full year rose by 17% compared to 2011, totalling 534.6t, the highest level since 1964.

Central bank purchases stood at 145.0t in Q4, up 29% on the corresponding quarter in 2011, making this the eighth consecutive quarter in which central banks have been net purchasers of gold.

Global investment in exchange traded funds in 2012 was up significantly by 51% on the preceding year, though Q4 was down 16% to 88.1t when compared with the high levels recorded in Q3 2012.

Marcus Grubb, managing director Investment at the WGC said China and India remain the world’s gold power houses by some distance, despite challenging domestic economic conditions.

“In India, consumer sentiment towards gold remained strong despite measures aimed at curbing demand, reaffirming gold’s role in Indian society. In an underdeveloped financial system in India, gold has an important role to play,” said Grubb.

Notwithstanding the predicted economic slowdown in China, investment demand was up 24% in Q4 on the previous quarter and jewellery consumption held steady at 137.0t, he added.

Indian full year demand was down 12% on the previous year, but the market performed strongly in the final quarter with total demand at 261.9t, an increase of 41% on the same period last year. Both jewellery and investment demand reached their highest levels for six quarters.

Demand for jewellery was up 35% year-on-year to reach 153.0t, and strong retail demand led to 108.9t of investment buying. In India the prospect of duty increases, which came in to force in January 2013, may have added to strong buying in the final quarter to beat the anticipated price rises.

In China, gold demand was flat year-on-year, reflecting the impact of economic slowdown. However for Q4, total demand was up 1% on the previous quarter to 202.5t. Jewellery demand was 137.0t up 1% on Q4 2011 and investment demand was 65.5t, up 2% on the previous year.

These increases may reflect the fact that the economic slowdown in China appears to have been shorter than expected, the WGC report noted.

The WGC said the Q4 2012 supply of gold from mines was up 2% year-on-year, while recycling was down 5% against the same period. Full year supply in 2012 remained stable against 2011 levels.

The Q4 and full year 2012 Gold Demand Trends report, which includes comprehensive data provided by Thomson Reuters GFMS, can be viewed at: www.gold.org/media